Thursday, October 2, 2014

Quite predictable

What does the below graph tells you...

Our net exports for petroleum is narrowing. At the same time oil prices if dropping to a new low recently in comparison to the last few years. If you have followed our own Malaysian story, we have been rather active on re-opening our marginal oil fields as when oil prices increases, the price of oil would have surpass costs of those older oil fields which were deemed to be too expensive to extract from.

Now that oil prices have started to take a hit, that profit margin is thinning. Malaysia have been largely dependent on oil produces, palm produces as the main revenue for the government. Hence, if oil is to have drop in price, it is actually not so good for us as government's income would be affected as taxes from petroleum could have been lower. That is quite similar for the crude and refined palm where we have scrapped taxes on those produces temporarily.

7 comments:

Investors wanted the Malaysian government to reduce subsidies and implement GST. If not, our bonds & stocks will be dumped and our debt ratings downgraded by rating agencies. Better to tighten our belts now, than to suffer a even worse fate later.

I just concerns that the tightening is only apply to the normal Malaysian and not the Governments. Just see the budget and the big chunk of revenue allocated to the operation and emolument. Yet I see no improvement in government services and quality.

When you are governing a country, it can't purely be governed from purely economic perspective. There are social and politic perspective to be factored in. All these need to be balanced up. You gain some, you lose some.

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